Question

Fox Co. purchased 10,000 shares (2% ownership) of Owl Corp. on February 14. Fox received a stock dividend of 2,000 Owl shares on the following April 30, when the market value per share was $35. Owl paid a cash dividend of $2 per share on December 15, the same year. In its income statement for this year, what amount should Fox report as dividend income?

Answer 1

Fox Co. shall report dividend income of $24,000 in its income statement prepared for the year.

Step-by-step explanation:

Total number of held by the Fox Co. of Owl Corp during the year:

Number of shares purchased on February 14: 10,000

Number of shares received as stock dividend on April 30: 2,000

Total shares held by the Fox Co. 12,000

Dividend paid by the Owl Corp during the year=$2 per share

Total dividend to be received by Fox Co.(2*12000)=$24,000

Fox Co. shall report dividend income of $24,000 in its income statement prepared for the year.